Statement of the Hon. Nydia M. Velazquez on The Economic Injury Disaster Loan Program: A View from Main Street
Washington, June 10, 2020
Over the last few months, the outbreak of COVID-19 has led to an unprecedented public health crisis AND a dire economic crisis. We have lost over 110,000 people to the disease and 40 million remain unemployed.
Back in February, as the pandemic was getting worse, we knew we needed to take action to help our small businesses survive the economic downturn.
We started working with the SBA and Governors around the country to leverage SBA’s disaster resources available through the Economic Injury Disaster Loan Program, also known as EIDL.
As the virus continued to spread, more state and local governments began imposing stay-at-home orders and business closures.
We quickly realized Congress needed to do more to meet the full scope of the problem, and that’s when we started working on what ultimately became the CARES Act.
To help small businesses and eligible non-profits, Congress created the new Paycheck Protection Program, expanded eligibility to the EIDL program, and provided payment and interest relief for current SBA borrowers.
I worked tirelessly to secure $10 billion in funding to create a new EIDL emergency grant program, which was designed to get money into the hands of struggling small businesses swiftly. Borrowers could request a loan advance of up to $10,000 within three days of applying that need not be repaid, even if the applicant was eventually denied the EIDL.
And due to unprecedented demand for the program, Congress infused another $10 billion into the emergency grant program and an additional $50 billion in the loan program as part of the Paycheck Protection Program and Health Care Enhancement Act.
Congress also increased SBA’s funding for salaries and expenses to hire staff, upgrade technology, and ultimately respond to that demand in a timely efficient fashion.
I especially want to thank the leadership and staff at the SBA for their tireless work over the past few months in meeting that historic demand. SBA has processed and disbursed more loans related to the pandemic than all previous disasters combined.
However, more than three months after Congress first enacted legislation to provide economic relief to small businesses, borrowers are still reporting significant challenges with EIDL grants and loans.
For example, EIDL loans are supposed to have a maximum loan size of $2 million. We learned that SBA imposed a maximum loan size of $150,000, shortchanging millions of small businesses.
Unfortunately, we’ve also learned that SBA is limiting the crucial grants to $1,000 per employee. And some are not even receiving the grant at all, which is simply unacceptable.
This is blunting the positive impact this program could have for the small businesses that need help the most.
We’ve also heard that SBA has not communicated effectively with applicants, nor has it provided them with reliable methods to check the status of their application.
Applicants need to know where they stand in the queue to approximate how much longer they can expect to wait to receive financing. And given the current economic climate, if they are going to be denied, they deserve timely action so that they can explore options for capital elsewhere.
These are just some of the reports the Committee has received with SBA’s administration of the EIDL program in the COVID-19 era.
As the Committee undertakes its oversight duties, we want to begin by hearing directly from small businesses who have applied for the program, so that we can understand the successes and challenges they have experienced.
However, in order to fully perform our work, we also need to hear from the SBA. Without their appearance and testimony before this Committee, it will be difficult to make additional changes to the agency’s programs.
Earlier today, Administrator Carranza testified before the Senate Small Business Committee and it is my hope that she will testify before us soon as well.With that, I look forward to hearing from our witnesses about their perspective on how Congress can keep working to improve the EIDL program and where we should focus our oversight efforts.